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8: ALEXANDER FORBES LTD.

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25 Sauer St. Extension,

Johannesburg, 2001 South Africa;

27/11/378-3000;

fax: 27/11/378-4222;

www.alexanderforbes.com

1998/9 1997/8

Gross revenues $299,985,200 $270,808,800

Brokerage revenues $275,991,200 $249,100,000

Brokerage: Retail 45% 52%

Wholesale 14% 14%

Reinsurance 3% 3%

Personal 16% 10%

Services 14% 13%

Investment income 3% 3%

Other 5% 5%

Employees 4,383 4,100

Rev./employee $62,969 $60,756

Offices 47 45

Converted at applicable exchange rates. Fiscal year ends March 31.

Alexander Forbes Ltd. has a new name and image to go with its rapidly expanding operations.

To present a more unified front to its clients, the Johannesburg, South Africa-based company has consolidated its three main operating arms-Price Forbes, which provides insurance brokerage and risk management services; Alexander Forbes, which provides employee benefits and personal financial services; and Nelson Hurst, which provides global wholesale and reinsurance services-under the common name Alexander Forbes.

One of the major reasons for the re-branding was that "people felt nothing had changed since Forbes bought Nelson Hurst," said Chief Executive Graeme Kerrigan.

The purchase of London-based Nelson Hurst Ltd. in 1997 first catapulted Alexander Forbes into the league of international insurance brokers. It has since continued to expand its reach and capabilities with additional acquisitions, and has moved to strengthen its financial services and personal lines operations amid competitive commercial insurance market conditions.

That produced a winning combination for Alexander Forbes during the 12 months ending March 31, 1999. Including on a pro forma basis 12 months of revenues for acquisitions made during the year and corporate investment income, Alexander Forbes' total gross revenues reached 1.74 billion rand, up 36% from fiscal 1997.

When converted to U.S. dollars using average exchange rates, the corporate revenues gained 10.8% to $300 million. The value of the rand against the U.S. dollar declined by 18.9% between the two reporting periods.

Alexander Forbes' revenues from brokerage services totaled 1.6 billion rand, also up 36% from fiscal 1997. Converted to dollars, brokerage revenues gained 10.8% to $276 million, ranking Alexander Forbes as the world's eighth-largest broker, up a notch from its position a year earlier.

Group pretax profits jumped 82% to 348.4 million rand ($59.9 million).

Quintin Heaney, financial director of Alexander Forbes, said the improved results are in part due to contributions from the Nelson Hurst operations, as well as other businesses acquired during the year.

The company also has seen growth in its domestic market, especially for benefit consulting services and investment consulting services.

Under the restructuring, the main divisions of Alexander Forbes are Alexander Forbes Financial Services, Alexander Forbes Risk Services Ltd., Alexander Forbes Reinsurance, and Alexander Forbes Technology.

The company's executives regard the two main thrusts of its operations -- financial services consulting and insurance brokerage services -- as complementary, providing a balance between fee-based revenues and commission-based earnings in the company's annual results.

"At the moment there is pressure on the corporate sector" of insurance brokerage, said John Percy-Davis, chairman and chief executive of Alexander Forbes Risk Services.

Alexander Forbes is able to counteract this pressure with rapid expansion of its financial services business, said Mr. Kerrigan, as the two businesses are "spread and balanced."

* Alexander Forbes Financial Services, which is based in Sandton, South Africa, comprises employee benefits and personal financial services operations in South Africa, the United Kingdom and elsewhere. AFFS showed a 51% surge in gross revenues in 1998.

AFFS's gains were strengthened by the acquisition of Media Insurance Services Ltd., a personal lines direct marketing company in the United Kingdom, said Leon Lewis, executive chairman of AFFS.

MIS specializes in selling low-cost life insurance, mainly through advertisements in large circulation newspapers in the United Kingdom, explained Mr. Lewis. Last year was "a great year in terms of volume of business written," he said, and the group is aiming to replicate that success in other parts of the world.

"It is quite a different business to the rest (of Alexander Forbes' operations), but it is a very good acquisition," he said.

Another contributor to AFFS's success is its Investment Solutions unit, which offers "multimanager portfolio services," in which it consults with clients on their investment needs or strategies and then brings to the table a variety of investment funds it has identified.

Since its launch at the beginning of last year, the amount of funds invested through the Investment Solutions unit has grown to as much as 1 billion Rand ($164.2 million) per month. "We're far and away the largest" such company in South Africa, said Mr. Lewis.

Other acquisitions made over the past year that now are part of the AFFS operation include South African independent financial adviser Fincorp, which was bought last December.

Alexander Forbes Financial Services' has continued its growth through acquisition in fiscal 1999, snapping up one of the largest employee benefit consulting operations in South Africa. The purchase of Ginsburg, Malan & Carsons (Pty) Ltd. was finalized on March 31, and the operation is expected to be completely integrated into AFFS by the end of this month.

Buying Ginsburg adds 450 staff to the financial services operation, said Mr. Lewis.

As part of the Ginsburg deal, Alexander Forbes also acquired Ginsburg's multimanager portfolio services business, dubbed SuperFlex.

Mr. Lewis aims to see the financial services arm of Alexander Forbes extend its international reach in the next year. In particular, he said he would like to see MIS extend its direct marketing operations into continental Europe and Southeast Asia.

Alexander Forbes Financial Services also has stationed two senior executives in Brazil.

"We are very keen to grow in Brazil, whether organically or whether we find acquisitions," said Mr. Lewis. "Brazil is a large and growing economy and is very sophisticated, but the financial services area is quite new and relatively small."

* Alexander Forbes Risk Services Ltd., based in London and led by Mr. Percy-Davis, now comprises the company's commercial retail insurance brokerage and risk management services worldwide. It also includes most of its wholesale operations, as well as Lloyd's of London brokerage.

AFRS also had a satisfying year, recording a 45% leap in revenues, though this was exaggerated somewhat by the rand's slip against other major currencies, as about half of the operation's revenues are generated in hard currencies.

Last year was very good for new business, said Mr. Percy-Davis. Medium-sized commercial property/casualty accounts and professional indemnity business both showed good growth in South Africa and the United Kingdom.

AFRS also has benefited from the consolidation that created megabrokers within Marsh & McLennan Cos. Inc. and Aon Corp., wresting business -- particularly corporate clients -- from those and other brokers, he said.

During fiscal 1998, Alexander Forbes Risk Services acquired several businesses, including Lumley Namibia Investments (Pty) Ltd., a Namibia-based broker. It also upped its stake in Guardrisk Insurance Co. (Pty) Ltd., a South African protected cell captive insurer, to 70% from 40%. The other 30% of Guardrisk remains with South African insurer Guardian National Insurance Co.

Alexander Forbes in May bought the remaining 80% it did not already own of Codissa-Nelson Hurst Mexico as part of its overseas expansion drive.

The broker also has cemented its relationship with European broker network FDG S.A. by recently becoming the network's fifth partner. Being part of Luxembourg-based FDG expands Alexander Forbes' European presence, said Mr. Percy-Davis, and it gives the broker the ability to deal with multinational clients in countries where it does not physically have its own operations.

Alexander Forbes' U.S. business currently is carried out through reciprocal relationships with a number of independent brokers, including Lockton Cos. Inc., the 11th-largest broker of U.S. business, though the company in the future aims to pursue "a U.S. strategy," said Mr. Kerrigan.

For now, Alexander Forbes still is seeking broker acquisitions, said Mr. Kerrigan, particularly in the United Kingdom and emerging markets such as the Asia-Pacific region.

"We are starting in the business of becoming more of an international business," said Mr. Kerrigan. "In two to three years' time, we want to be independent and internationally recognized as top quality."

To help facilitate international expansion, Mr. Heaney, the finance director, has relocated to the Alexander Forbes' London operation from Johannesburg.

* Alexander Forbes Reinsurance is the third division within the company.

"We have pockets of reinsurance in the U.K., South Africa, Asia and Latin America," said Mr. Percy-Davis.

The reinsurance brokerage division is split into treaty services and facultative services. Traditional reinsurance, specialist health care reinsurance and alternative risk transfer products, ranging from financial reinsurance to catastrophe bonds, fall under the province of treaty services.

Facultative services places straightforward facultative reinsurance protection for individual risks, and it also deals in bankers' blanket bond, motor and personal accident binders, marine line slips and finite reinsurance.

Reinsurance brokerage currently is "a very small business in relation to the whole group," according to Mr. Percy-Davis. "It is a business we believe we've got to have more strength in," he added.

In February, Alexander Forbes completed the acquisition of Capital Solutions, a Johannesburg-based health care reinsurer.

* Alexander Forbes Technology, the company's fourth division, aims to use technology to improve both the company's internal processes and customer service.

Alexander Forbes is trying to move the technology division into a "profit center" mentality, said Mr. Percy-Davis. "The whole aim is to ensure that we are at the cutting edge of technological developments."

Up to 10% of the company's revenues are spent on new technology annually. Initially, the technology investment was made for improved communication within the company, said Mr. Kerrigan, but it now is expanded to better serve its customer base and provide clients with information more quickly, such as, for example, online claims notifications.

For the 52-week period ended March 31, 1999, Alexander Forbes' shares peaked at 15.5 rand, and reached a low of 7 rand on the Johannesburg Stock Exchange. The shares closed at 16.1 rand on July 9.